Wild on Wall Street

What does it really mean for your retirement plan?

The news is filled with headlines declaring mergers, bankruptcy, and government bailouts. If all the news has you questioning what this means for your retirement plans, you’re not alone. It’s definitely a good idea to monitor your UPMC Savings Plan account and be aware of what’s happening in the financial markets. However, don’t make an impulsive move that you’ll regret later, simply based on a news article or talk around the water cooler. Instead, arm yourself with the facts and determine what, if anything, the recent financial news means for your Savings Plan investments.

Fact #1: By their nature, stocks experience volatility.

You need to expect some ups and downs when investing. These past few weeks, the market has experienced more ups and downs and twists and turns than most financial experts predicted. While there are no guarantees on what will happen in the future, the best advice may be the same advice you’ve heard for years: Keep a long-term focus, don’t panic, and don’t make the mistake of chasing market returns.

Fact #2: Your Savings Plan investments are in a trust for the exclusive benefit of plan participants.

As you contribute money to your Savings Plan, the plan buys shares of the investments you choose. Those investments are held in a trust. That means those assets are set aside and cannot be used for any other purpose besides participants’ savings. While that doesn’t guarantee that you won’t see a negative rate of return on your investments at times, it does provide you with some assurance that your assets are out of the reach of others.

Fact #3: A diversified portfolio is most likely your best bet to weather volatility in the market.

Diversification provides some protection when the market goes down, but still lets you win a bit when the market goes up.A diversified portfolio means you invest in a variety of stocks (often through an investment or mutual fund) so that, if one stock hits hard times, your entire portfolio won’t. It also means you invest in different types of assets, such as stocks, bonds, and stable value investments, so that if one segment of the market experiences a downturn, there may be another segment that doesn’t.

If you want a simple solution to diversifying your investments, consider the BGI LifePath® Portfolios, the target date fund investments in the UPMC Savings Plan.

Fact #4: A savings plan is still one of your best opportunities for long-term savings.

It allows you to save through convenient payroll deductions and, if eligible, UPMC matches* a portion of your contributions. While saving now may be hard — especially as you are watching your overall balance fluctuate in the current market conditions — it may be a really smart move in the long run. When the market recovers, the people who win most are those who bought when the price was low. Contributing to the UPMC Savings Plan each pay period provides the best opportunity for you to reach your retirement goals, even during times in which the stock market fluctuates.

Uncertainty is part of investing. There are no guarantees. By arming yourself with the facts, you will be better prepared to make smart decisions for your future.

*Benefits and eligibility described may not be applicable to all staff. Some business units have unique benefit programs, certain job classifications may affect benefit eligibility, and contract terms determine benefits for physicians and members of collective bargaining units.

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